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49 Solar Emergy Evaluation of the Portuguese Economy

Carlos Oliveira, Cecília Martins, José Gonçalves

and Francisco Veiga

ABSTRACT

This paper presents the emergy evaluation of the Portuguese economy for the years 2000, 2005 and

2009. The main objective is to provide comprehensive emergy indicators which seek to incorporate the

environmental dimension into well-known macroeconomic indicators of the Portuguese economy.

Attention is given to emergy measures of national intensity and efficiency (Emergy divided by GDP

and several measures of currency, i.e., the M1, M2 and M3 monetary aggregates; Emergy per capita;

Emergy Yield Ratio (EYR); Emergy of Imports to Emergy of Exports (IMP/EXP); Emergy Investment

Ratio (EIR); Emergy Exchange Ratio (EER); amongst others). Results show a decline in the total

amount of annual emergy required to support the country’s economy in 2009 relative to 2000.

Additionally, emergy per capita also decreased, which indicates that the population wellbeing in 2009

might be inferior to the level attained in 2000, as fewer resources from the geobiosphere were invested

in each person. On the other hand, results show that the emergy required to produce 1 USD of

economic output, measured as real GDP, decreased in 2009, indicating that real output grew faster

than resource inputs. The verified decrease in EYR and the increase in EIR suggest that, in 2009, the

Portuguese economy was more dependent on imported emergy flows. The EER indicates that Portugal

traded at a disadvantage in the global market and that the external balance of goods and services,

both on an emergy and on a national accounts perspective or economics perspective, presented a

deficit. According to sustainability measures, the Portuguese economy is not sustainable.

INTRODUCTION

Emergy Synthesis - This paper presents the emergy evaluation of the Portuguese economy for the

years 2000, 2005 and 2009. The main objective is to provide comprehensive emergy indicators which

seek to incorporate the environmental dimension into well known macroeconomic indicators of the

Portuguese economy. In this period, the economy was characterized by a low rate of economic growth,

a significant increase of the services sector share of Gross Domestic Product (GDP), and persistent

deficits in the balance of goods and services. The emergy synthesis method employed, based on

existing statistical data, reports emergy assigned to annual system inflows and outflows of matter,

energy and money.

Homeland - Portugal is located in the southeastern corner of Europe, in the Iberian Peninsula, and

has two Autonomous Regions in the Atlantic Ocean: the Azores and the Madeira archipelagos. The

Atlantic front location of the Iberian Peninsula has a great influence on the features of the Portuguese

mainland due to the natural conditions it transmits and to the privilege of having a large coastline.

Population distribution – In the year 2000 the population density was 111 inhabitant/km2, a

value very close to that of the EU27 (27 member states of the European Union) average, slightly

increasing in 2009 to 115 inhabitant/km2; the higher population density along the sea-coast increased

over time and the population concentration movement near the big metropolitan areas of Lisbon and

Oporto was reinforced.

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Portuguese Economy - The most evident changes in the productive structure since the 1990s,

were: reduction in primary sector activities, mostly concerning agriculture, forests and fishing (in the

year 2000 the contribution to total Gross Value Added, GVA, was 3.6% decreasing to 2.3% in 2009);

decreased importance of industry and construction sectors in relation to total GVA (respectively,

17.7% and 8.2% in 2000 and 13% and 6.6% in 2009); and a slight increase in the energy sector, water

and drainage (2.7% in 2000 to 3.8% in 2009). Furthermore, the tertiary sector has been stimulated by

the media sector, banks, services supplied to companies and tradable services, from which tourism

stands out as the main generator of external incomes (the services sector registered an increase in the

share of total GVA from 67.9% in 2000 to 74.2% in 2009).

Macroeconomic Performance - In 2009, the nominal Gross Domestic Product (GDP) amounted

to 168.5 billion of euros. This value corresponds to a nominal decrease of 2.0% and to a real decrease

of 2.9% when compared to 2008, which can be seen as a consequence of the recessionary effects of the

international financial crisis. The performance of the Portuguese economy during the period 2000-

2009 illustrates how difficult it has been for Portugal to adapt to the changes in the economic

environment brought about by increased economic globalization, enlargement of the European Union

and the introduction of the Euro. The increasing gap over the last decade between Portugal’s per capita

GDP and that of the European (EU 27) average is the main indicator of the poor macroeconomic

performance of the Portuguese economy (GDP per capita in Purchasing Power Standard was around

78.0% of the EU27 average in 2000, but only 76.6% in 2009). Other indicators include: increase in the

unemployment rate (from 3.9% in 2000 to 9.5% in 2009); low labor productivity (68.8% of the EU27

average in 2000 and 71.8% in 2009); and an excessive weight of private consumption and, mostly, of

public expenses on national expenditure. Both have increased faster than production (82.5% of GDP in

2000 and 87.6% in 2009) and were supported by increasing private and public debt. Furthermore, there

was an important and long lasting investment crisis (Gross fixed capital formation was of 27.1% of

GDP in 2000 and only 20.9% in 2009) and a slowdown of the exports of goods and services (real

growth of 8% in 2000, 8.7% in 2006, -0.5% in 2008 and -11% in 2009) which, combined with

increased imports of goods and services until 2008, produced a persistent deficit in the balance of

goods and services (-11% from GDP in 2000 and -7.5% in 2009) and in the current account, leading to

the accumulation of a very large stock of external debt (data sources: GEPEARI 2010, Banco de

Portugal 2001, Banco de Portugal 2010 and Instituto Nacional de Estatística).

METHODOLOGY

The procedures to evaluate the emergy supporting the Portuguese Economic System, for the years

2000, 2005 and 2009, followed the general Emergy Synthesis Methodology of states and nations

presented in several previous studies (e.g., Odum 1996, Brown 2003, Brown et al. 2009, Sweeney et

al. 2006, Campbell 2009). In this paper, the new emergy reference baseline of 15.2E25 seJ/yr was used

(Brown and Ulgiati 2010). Unit Emergy Values, UEV (seJ/J, seJ/kg or seJ/$), were obtained from

several previous studies and converted to new updated values by multiplying them by the ratio

between the new baseline and the previous one. The numerous resource flows were aggregated into:

local renewable resources (R); local nonrenewable resources (N), which are categorized into dispersed

rural sources (N0), concentrated resources (N1) and non transformed minerals and metals that are

exported (N2); imports (IMP), whose major items are grouped into three categories including fuels,

minerals and electricity (F), other goods (G), and services in imports (P2I); exports (EXP) divided also

into three parts, one consisting of transformed products (B), a second one of services in exports (P1E)

and a third part, already mentioned, of non transformed metals and minerals (N2). Total emergy

required (U), was calculated for each year by adding emergy flows from local renewable resources,

from local nonrenewable dispersed and concentrated resources, and from imports (U =

R+N0+N1+F+G+P2I). The aggregated emergy flows were used to calculate several emergy indices

generally used in national emergy syntheses (e.g., Odum 1996, Brown et al. 2009, Brown 2003, Brown

and Ulgiati 1997, Campbell 2009, Ulgiati et al. 1994, Gasparatos and Gadda 2009, Lomas et al. 2008,

439

Yang et al. 2010, Cialani et al. 2006): Emergy/capita (U/capita); Emergy/area (U/area);

Emergy/Money Ratio (EMR=U/GDP); Imports/Exports (IMP/EXP); Emergy Yield Ratio

(EYR=U/IMP); Emergy Exchange Ratio (EER=(country Emergy/Money ratio)/(world Emergy/Money

ratio)); Emergy Investment Ratio (EIR=IMP/(N0+N1+R)); Percent Renewable Emergy

(%Ren=(R/U)x100); Environmental Loading Ratio (ELR=(N0+N1+IMP)/R); Emergy Sustainability

Index (EmSI=EYR/ELR); and Renewable Carrying Capacity ((Renewable Emergy)/(Emergy/capita) ).

This study includes Portugal’s mainland and its two autonomous regions (Madeira and Azores).

For renewable emergy accounting, the overall area of the country was divided into two different areas

(Campbell 2009) – the country’s coastal area and the land area. Only the largest renewable flow for

each area was accounted for in order to avoid double counting, and the two major flows were added to

get the total input renewable emergy flow of the entire area of the country. In order to evaluate the

Emergy/Money ratio of Portugal (P1), real GDP (chain-linked volume data, 2000 $), nominal GDP and

monetary aggregates M1, M2 and M3 were considered. The Emergy/Money ratio of the world (P2),

used in the calculation of the emergy of services in imported flows (P2I) was obtained from Brown and

Ulgiati (2011), by data interpolation for the years 2000 and 2005 and data extrapolation for the year

2009. The values of the indices obtained were compared with those of other countries presented in

several studies (e.g., Brown 2003, 2009, Sweeney et al. 2006, Lomas 2006).

RESULTS

Emergy National Account

The emergy evaluation of the Portuguese economic system for the years 2000, 2005 and 2009 is

presented in Table 1. Table 2 contains, for those years, a summary of the main inflows and outflows.

Total emergy required (U) was 1.50E24 seJ in 2000 and 1.45E24 seJ in 2009 (-3.3%), while 2005

presents the highest value of the three (Figure 2). Emergy from local nonrenewable flows (N0 + N1) is

the major contribution to the total emergy supporting the economic system, being 8.24E23 seJ in the

year 2000 and 7.15E23 seJ in 2009 (-13.2%) representing, respectively, 54.9% and 49.3% of total

emergy. This variation is responsible for the decreased total value of emergy required in 2009

compared to 2000. The second major contribution is from imported flows (IMP), which increased from

6.08E23 seJ in 2000 to 6.71E23 seJ in 2009 (+10.4%) representing, respectively, a variation of 40.5%

to 46.3% of the total emergy required. The contribution of the renewable emergy flow (R) is almost

unchanged over time, being 6.71E22 seJ in 2000 and 6.35E22 seJ in 2009 (-5.3%), contributing with

4.5% and 4.4% of the total emergy, respectively. Thus, even though the emergy of local nonrenewable

flows is the largest contribution to the total emergy accounted for, its importance decreased in favor of

emergy of imported flows. The aggregated diagram shown in Figure 1 further summarizes Portugal’s

emergy synthesis for the year 2000.

Local Renewable and Nonrenewable Emergy Flows

Sea waves provide the largest renewable emergy flow for the coastal area, while rain is the main

provider for the land area. The former is on average about five times the latter, 5.23E22 seJ and

1.10E22 seJ, respectively (Table 1). The small variability in the renewable emergy flows calculated

depends exclusively on annual rainfall, due to lack of data concerning the variability of other flows in

the time period of this study. Dispersal rural sources, N0, consist exclusively of soil loss (mineral and

organic), because for the time period considered in this study, the data indicated no losses concerning

forest extraction, and no data were available regarding losses associated with other resources like

fishery production or water extraction. Concentrated resources, N1, consist of reserves of metals and

minerals, since fuels are not included because Portugal is not a producer of this type of resources. The

largest component of nonrenewable emergy flows consists of minerals, which was 7.72E23 seJ in 2000

with a decrease to 6.64E23 seJ in 2009 (-14%) representing, respectively, 94% and 93% of the total

flow. The second largest component is metals, which was 3.81E22 seJ in 2000 with an increase to

4.03E22 seJ in 2009 (+5.7%), representing 5% and 6% of the total local nonrenewable emergy flows,

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Table 1. Emergy evaluation of resource basis for Portugal (2000, 2005 and 2009).

Note Item 2000 2005 2009 % Diff., 00-09

Renewable resources (seJ/yr)

1 Sunlight 4.11E+20 4.11E+20 4.11E+20 0.0

2 Rain, chemical 1.02E+22 4.69E+21 7.72E+21 -24.2

2a Land 8.76E+21 4.03E+21 6.63E+21 -24.2

2b Continental Platform 1.43E+21 6.61E+20 1.09E+21 -24.2

3 Rain, geopotential 6.07E+21 2.79E+21 4.60E+21 -24.2

4 Wind, kinetic energy 8.39E+21 8.39E+21 8.39E+21 0.0

5 Waves 5.23E+22 5.23E+22 5.23E+22 0.0

6 Tide 1.67E+22 1.67E+22 1.67E+22 0.0

7 Earth Cycle 4.43E+21 4.43E+21 4.43E+21 0.0

Indigenous Renewable Energy (seJ/yr)

8 Renewable Energy 8.59E+21 4.50E+21 9.26E+21 7.9

8a Hydroelectricity 8.11E+21 3.39E+21 5.87E+21 -27.6

8b Geothermal 6.48E+19 5.80E+19 1.48E+20 127.6

8c Wind 5.76E+19 6.06E+20 2.59E+21 4396.3

8d Others (solar, tides and waves) 7.27E+17 2.18E+18 1.11E+20 15100.0

8e Biomass and waste 3.50E+20 4.49E+20 5.46E+20 55.7

9 Agriculture Production 1.07E+23 1.05E+23 1.04E+23 -3.5

10 Livestock Production 4.43E+22 4.34E+22 4.41E+22 -0.4

11 Fisheries Production 2.71E+21 2.96E+21 2.80E+21 3.5

12 Fuelwood Production 7.69E+19 7.69E+19 7.69E+19 0.0

13 Forest Extraction 1.31E+21 1.30E+21 1.15E+21 -12.4

14 Total electricity used 4.48E+22 5.37E+22 5.62E+22 25.5

Nonrenewable sources from within system (seJ/yr)

15 Minerals 7.72E+23 8.23E+23 6.64E+23 -14.0

16 Metals 3.81E+22 3.96E+22 4.03E+22 5.7

17 Soil losses 1.34E+22 1.11E+22 1.11E+22 -16.8

Imports (seJ/yr)

18 Fuels 1.47E+23 1.67E+23 1.45E+23 -1.0

19 Metals 7.91E+21 6.49E+20 5.83E+20 -92.6

20 Minerals 1.34E+22 1.28E+22 8.41E+21 -37.0

21 Transformed metals 7.18E+22 9.09E+22 7.41E+22 3.3

22 Transformed minerals 5.90E+22 5.42E+22 1.26E+23 112.8

23 Food and agricultural products 2.93E+22 3.50E+22 3.69E+22 25.8

24 Livestock, meat and fish 1.50E+22 1.75E+22 2.56E+22 70.3

25 Plastics and rubber 6.43E+21 7.96E+21 9.38E+21 45.9

26 Chemicals 5.93E+22 6.51E+22 7.13E+22 20.2

27 Finished materials 7.39E+22 6.09E+22 6.67E+22 -9.8

28 Machinery and transportation equipment 1.21E+22 1.14E+22 1.53E+22 26.4

29 Electricity 5.47E+21 1.12E+22 8.84E+21 61.7

30 Imported services (tourism included) 1.50E+22 1.22E+22 1.65E+21 -89.0

31 Services on imported goods 9.23E+22 8.15E+22 8.10E+22 -12.3

Exports (seJ/yr)

32 Food and agricultural products 4.22E+21 6.58E+21 1.02E+22 141.0

33 Livestock, meat and fish 7.37E+21 8.81E+21 1.23E+21 67.1

34 Finished materials 5.06E+22 5.21E+22 6.02E+22 18.9

35 Fuels 1.22E+22 2.07E+22 2.05E+22 67.8

36 Metals 4.15E+22 4.05E+22 3.95E+22 -4.8

37 Minerals 5.27E+21 6.38E+21 8.06E+21 53.1

38 Transformed metals 9.67E+21 3.72E+22 3.85E+22 298.2

39 Transformed minerals 2.63E+22 3.40E+22 3.12E+22 18.6

40 Chemicals 3.62E+22 4.37E+22 3.41E+22 -5.6

41 Machinery and transportation equipment 6.99E+21 7.16E+21 1.09E+22 55.3

42 Plastics and rubber 3.66E+21 6.46E+21 7.18E+21 96.0

43 Exported services (tourism included) 1.00E+23 6.16E+22 1.13E+23 12.3

44 Service on exported goods 3.36E+23 3.79E+23 3.05E+23 -9.3

45 Electricity 4.38E+21 3.26E+21 3.28E+21 -25.1

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Figure 1. Aggregate diagram for the Portuguese economic system for the year 2000 (adapted from

Brown 2003).

respectively. Soil loss is a minor component, and was 1.34E22 seJ in the year 2000, decreasing to

1.11E22 seJ in 2009 (-16.8%) representing nearly 1% of the total nonrenewable emergy flows in each

year. Thus, the decrease in the nonrenewable contribution in 2009, compared to 2000, is due to a

decrease in mineral consumption. This is related with the decrease in construction materials

consumption, such as sand, gravel, gypsum and clay, which reflects the evolution of the construction

sector in Portugal over the last decade. National accounts data also indicate that the construction sector

is losing weight in relation to total GVA (8.2% in 2000 and 6.6% in 2009).

Imported and Exported Emergy Flows

The composition of imported emergy flows and exported emergy flows in 2000 and in 2009 is

presented in Figure 3. Results show that emergy of aggregated imported goods (G), mainly from

metallic products, chemicals and finished products (textiles, wood, paper and leather), makes the

largest contribution to the total imported emergy. It was 3.27E23 seJ in 2000 and rose to 4.25E23 seJ

in 2009 (+30.0%), accounting for 53.8% and 63.3% of the total imported emergy flows, respectively,

and is responsible for its greater value in 2009 compared to the year 2000. The second major

contribution was from emergy of aggregated fuels, metals, minerals and electricity flows (F), which

was 1.74E23 seJ in 2000 and 1.63E23 in 2009 (-6.0%), accounting for 28.6% and 24.3% of the total

imported emergy flows, respectively. Fuels represent 84.5% of the group in 2000 and 89.0% in 2009,

although the absolute value is nearly the same for both years (Table 1). Emergy flows of imported

services (P2I), which include imported services (including tourism) and services in imported goods,

decreased its contribution to the total imported emergy flows, from 1.07E23 seJ in 2000 to 8.26E23 seJ

in 2009 (-23.0%) accounting, respectively, for 17.6% and 12.3% of the total emergy imported flows.

As far as exported emergy flows are concerned, the largest contribution was from services (P1E),

which includes exported services (including tourism) and services in exported goods, with 4.37E23 seJ

in 2000 and 4.18E23 seJ in 2009 (-4.4%), accounting for 67.8% and 60.2% of the total exported

emergy flows, respectively. The second major contribution to exported emergy flows was from

transformed products (B), mainly finished products (textiles, wood products, and paper), metallic

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Table 2. Summary of emergy flows of the Portuguese economy (2000, 2005 and 2009) .

Item Expression 2000 2005 2009 % Diff., 00-09

1 Country area (m2) - 9.22E+10 9.22E+10 9.22E+10 0.0

2 Population (inhabitants) - 1.02E+07 1.05E+07 1.06E+07 4.1

3 Renewable sources (seJ/yr) R 6.71E+22 5.91E+22 6.35E+22 -5.3

4 Nonrenewable resources (seJ/yr) N 8.70E+23 9.20E+23 7.63E+23 - 12.4

5 Local nonrenewable resource (seJ/yr) N0+N1 8.24E+23 8.73E+23 7.15E+23 - 13.2

6 Dispersed rural source (seJ/yr) N0 1.34E+22 1.11E+22 1.11E+22 -16.8

7 Concentrated used (seJ/yr) N1 8.10E+23 8.62E+23 7.04E+23 -13.1

8 Exported without use (seJ/yr) N2 4.68E+22 4.69E+22 4.76E+22 1.8

9 Imported fuels and minerals (seJ/yr) F 1.74E+23 1.91E+23 1.63E+23 -6.0

10 Imported goods (seJ/yr) G 3.27E+23 3.43E+23 4.25E+23 30.0

11 Dollars paid for imports (USD) I 4.73E+10 4.57E+10 4.42E+10 -6.5

12 World emergy/USD ratio, used in

imports (seJ/USD)

P2 2.27E+12 2.05E+12 1.87E+12 -17.6

13 Emergy of services in imported goods

and fuels (seJ/yr)

P2I 1.07E+23 9.37E+23 8.26E+23 -23.0

14 Dollars received for exports (USD) E 3.41E+10 3.44E+10 3.55E+10 4.2

15 Emergy exported of processed products

(seJ/yr)

B 1.62E+23 2.20E+23 2.28E+23 41.3

16 Flow of imported emergy (seJ/yr), IMP F+G+P2I 6.08E+23 6.28E+23 6.71E+23 10.4

17 Total emergy inflows (seJ/yr) R+N+F+G+P2I 1.55E+24 1.61E+24 1.50E+24 -3.1

18 Total emergy (seJ/yr), U N0+N1+R+F+G+P2I 1.50E+24 1.56E+24 1.45E+24 -3.3

19 Real Gross Domestic Product (USD) GDPr 1.17E+11 1.22E+11 1.23E+11 5.4

20 Nominal Gross Domestic Product

(USD)

GDPn 1.17E+11 1.91E+11 2.34E+11 100.2

21 Total emergy to GDPr (seJ/USD), used

in exports, P1

P1=U/GDPr 1.28E+13 1.28E+13 1.18E+13 -8.2

22 Total emergy to GDPn (seJ/USD) U/GDPn 1.28E+13 8.16E+12 6.19E+12 -51.7

23 Emergy value of goods and service

exports (seJ/yr)

P1E 4.37E+23 4.40E+23 4.18E+23 -4.4

24 Flow of exported emergy (seJ/yr), EXP B+N2+P1E 6.45E+23 7.07E+23 6.94E+23 7.6

25 Monetary aggregates (USD) M1 3.96E+10 6.63E+10 7.85E+10 98.2 M2 1.06E+11 1.63E+11 2.27E+11 129.0 M3 1.07E+11 1.65E+11 2.45E+11 123.6

26 Total emergy to money supply ratios U/M1 3.78E+13 2.35E+13 1.85E+13 -51.2 U/M2 1.41E+13 9.57E+12 6.39E+12 -54.8 U/M3 1.40E+13 9.46E+12 5.92E+12 -57.8

Figure 2. Emergy inflows and total emergy supporting the Portuguese economy for the years 2000,

2005 and 2009.

0.0E+00

4.0E+23

8.0E+23

1.2E+24

1.6E+24

2.0E+24

1999 2001 2003 2005 2007 2009

Em

pow

er (

seJ

/yr)

Renewable sources Local non renewable resourcesImports Total Emergy

443

products and chemicals, with 1.62E23 seJ in 2000 and 2.28E23 seJ in 2009 (+41.3%), accounting for

25.1% and 32.9% of the total exported emergy flows, respectively. Emergy of metals and minerals

non-transformed flows (N2) was 4.68E22 seJ in 2000 and 4.76E22 seJ in 2009 (+1.7%), decreasing its

contribution to the total exported emergy flows from 7.3% to 6.9%, respectively. The total imported

emergy flows and the total exported emergy flows for the years 2000, 2005 and 2009 are close to each

other, the former being lower than the latter (Figure 4).

DISCUSSION

The main emergy indices for emergy evaluation of Portuguese economic system, obtained from

aggregated emergy flows, are presented in Table 3 as well as the difference between the years 2009

and 2000.

Figure 3. Imported and exported emergy flows composition for the years 2000 and 2009.

Figure 4. Imported and exported emergy flows for the years 2000, 2005 and 2009.

0.0E+00

2.0E+23

4.0E+23

6.0E+23

8.0E+23

1999 2001 2003 2005 2007 2009

Em

po

wer

(se

J/y

r)

Imports

Exports

444

Table 3. Emergy indices for the emergy evaluation of the Portuguese economy (2000, 2005 and 2009).

Name of Index Expression 2000 2005 2009 % Diff.

00-09

1 Fraction of total emergy from

indigenous sources

(N0+N1+R)/U 0.59 0.60 0.54 -9.6

2 Imports minus exports

(seJ/yr)

(F+G+P2I)-

(N2+B+P1E)

-3.73E+22 -7.89E+22 -2.27E+22 -39.1

3 Imports to Exports (F+G+P2I)/ (N2+P1E) 0.94 0.89 0.97 2.7

4 Fraction locally renewable R/U 0.04 0.04 0.04 -2.2

5 Fraction purchased (F+G+P2I)/U 0.41 0.40 0.46 14.1

6 Fraction from imported

services

P2I/U 0.07 0.06 0.06 -20.4

7 Fraction that is free (R+N0)/U 0.05 0.05 0.05 -4.1

8 Ratio of concentrated to rural

emergy

(F+G+P2I+N1)/(R+N0) 17.62 21.22 18.42 4.6

9 Emergy density (seJ/m2/yr) U/(area, ha) 1.63E+17 1.69E+17 1.57E+17 -3.3

10 Emergy per capita (seJ/cap) U/population 1.47E+17 1.48E+17 1.36E+17 -7.1

11 Renewable carrying capacity

at present living standard

(R/(U/population)) 4.58E+05 4.00E+05 4.66E+05 1.8

12 Ratio of electricity use to total

emergy

(elect.)/U 0.03 0.03 0.04 29.7

13 Fuel per person (seJ/cap) Fuel/population 1.44E+16 1.58E+16 1.37E+16 -4.9

14 Emergy investment ratio

(EIR)

IMP/(R+N0+N1) 0,68 0,67 0,86 26.2

15 Environmental loading ratio

(ELR)

(F+G+P2I+N)/R 22.03 26.20 22.57 2.5

16 Emergy yield ratio (EYR) U/(F+G+P2I) 2.47 2.48 2.16 -12.4

17 Emergy sustainability index

(EmSI)

EYR/ELR 0.11 0.09 0.10 -14.5

18 Emergy exchange ratio (EER) P2/P1 0.18 0.16 0.16 -10.2

Emergy Intensities

As population increased slightly, from 1.02E7 inhabitants in 2000 to 1.06E7 in 2009, and total

emergy reported slightly decreased, emergy per capita decreased 7.9% over this period, from 1.47E17

seJ/capita in 2000 to 1.36E17 seJ/capita in 2009 (Figure 5). The variation of the emergy/area ratio

followed that of total emergy, as the area did not change (1.63E17 seJ/m2 in 2000 and 1.57E17 seJ/m

2

in 2009 (-3.3%)). These variations, associated with the decrease in total emergy required, indicate that,

the wellbeing of the population in 2009 might be inferior to the level attained in 2000, since fewer

resources were required. However, the magnitude of the values of these intensity indices is considered

high and characteristic of developed economies (Brown 2003).

The measure of aggregate output in the national income accounts is the gross domestic product

(GDP). Portugal’s nominal GDP (at current prices) increased from 1.17E11 USD in 2000 to 2.34E11

USD in 2009 (+100.2%) and real GDP (chain-linked volume data, at 2000 prices) increased from

1.17E11 USD in 2000 to 1.23E11 USD in 2009 (+5.4%) (Figure 6). Nominal GDP is simply the sum

of the quantities of final goods produced multiplied by their current prices, and it may increase over

time for two reasons: greater production, or higher prices. Other national economic measures of

currency are the monetary aggregates M1, M2 and M3 (Figure 7). The monetary aggregates are

affected by monetary policy, and M1, called narrow money (currency in circulation + checkable

deposits), is the most liquid; M2 is called broad money, and is equal to M1 + money market mutual

fund shares + money market deposit accounts + time deposits; finally, M3 includes a few more assets

than M2.

445

Figure 5. Portuguese population and empower per capita for the years 2000, 2005 and 2009.

Figure 6. Total emergy required in the Portuguese economy and monetary flows measured by nominal

GDP and by real GDP (chain-linked volume data, 2000 prices).

Figure 7. Total emergy required in the Portuguese economy and monetary flows measured by

monetary aggregates M1, M2 and M3 and real GDP (chain-linked volume data, 2000 prices).

0.00E+00

5.00E+16

1.00E+17

1.50E+17

2.00E+17

0.0E+00

2.0E+06

4.0E+06

6.0E+06

8.0E+06

1.0E+07

1.2E+07

1999 2001 2003 2005 2007 2009

Em

po

wer

p

er c

ap

ita

(seJ

/ca

p/y

r)

Po

pu

lati

on

Population

Empower per capita

0.0E+00

4.0E+23

8.0E+23

1.2E+24

1.6E+24

2.0E+24

1.0E+11

1.5E+11

2.0E+11

2.5E+11

3.0E+11

3.5E+11

1999 2001 2003 2005 2007 2009

Em

pow

er (

seJ

/yr)

Doll

ars

($

)

Real GDP Nominal GDPEmergy

0.0E+00

4.0E+23

8.0E+23

1.2E+24

1.6E+24

2.0E+24

0.0E+00

5.0E+10

1.0E+11

1.5E+11

2.0E+11

2.5E+11

1999 2001 2003 2005 2007 2009

Em

po

wer

(se

J/y

r)

Do

lla

rs (

$)

M1 M2 M3Real GDP Emergy

446

Within the set of selected key indicators that central banks consider important to monitor and

study, for further monetary police, are the monetary aggregates. That monetary analysis relies on the

fact that monetary growth and inflation are closely related in the medium to long run, thus

underpinning the medium-term orientation of the central bank’s monetary policy strategy. Such

analysis helps to provide both a better insight into the behavior of M3 and a broad picture of the

liquidity conditions in the economy and their consequences in terms of risks to price stability. Finally,

the analysis of money and credit may, under certain circumstances, provide early information on

developing financial instability. Such information is of relevance for monetary policy because the

emergence of financial imbalances or asset price bubbles could have a destabilizing effect on activity

and, ultimately, prices in the medium term. As Odum argued (2007 p.257), adding some money (which

means that central banks increases the monetary aggregates) in order to cause money to circulate faster

increases the energy and emergy flows if unused resources are available. But if those resources aren`t

available it would cause inflation, meaning that more money is circulated but the supply of real wealth

is not increased. Better knowledge on emergy relations to measures of money circulation could provide

information needed to set monetary policies and could clarify about the economic and emergetic roles

of nations.

Over the sample period the average growth rate of the monetary aggregates M2 and M3 was

stable, while the average growth rate of real GDP has been very low. This helps explain why in 2005

and 2009, the aggregates M2 and M3 (the broadest of the three aggregates) were higher than real GDP,

as seen in Figure 7. According to the quantity equation, MV=PY, where M is the monetary aggregate,

V is the velocity of money, P is the price level and Y is the real income. Considering that during the

2000-2009 period, Y (real GDP) is approximately constant and assuming that V is small and close to 1,

then nominal GDP (PY) should be practically equal to M3, and very close to M2, as can be confirmed

in Figure 8. This result indicates that money supply is proportional to nominal GDP and that, during

the period under analysis, as real GDP growth is very small, money supply simply reflects increases in

the price level.

As proposed by Odum (1996, p.7), emergy is a scientific measure of real wealth in terms of the

energy required to do work. To relate emergy measures with economic ones, it is necessary to

consider, in both perspectives, the need to eliminate the effect of increasing prices. For this purpose,

this work focuses on real GDP, rather than nominal, because the former more accurately measures the

volume production and its change over time. Likewise, all the values of monetary flows considered in

emergy accounting (e.g., dollars paid for imported goods and services) are real quantities.

The emergy to money ratio using real GDP, nominal GDP, and monetary aggregates M2 and M3

is shown in Figure 9. It is noticeable that all the ratios have similar decreasing trends, but the ratio to

real GDP is the one which presents smaller variation over the period. It means that the numerator

amount (all system inputs), varies more likely the denominator (system output aggregate) and, hence, it

is the adopted emergy/money ratio to relate the two different perspectives (donor side value versus

user side value) of measuring real wealth. The value, which decreased from 1.28E13 seJ/USD in the

year 2000 to 1.18E12 seJ/USD in 2009 (-8.2%) is consistent with all developed countries and means

that, inside the country, the same amount of money could buy less emergy in 2009 than in 2000, that

is, the emergy buying power of money was lower in 2009 than in 2000 (Brown et al. 2003, 2009,

Cialani et al. 2004, Campbell et Lu, 2009).

Indices of National Economic Efficiency

One of the major macroeconomic variables, which tell about important aspects of countries

economy, is the trade deficit (the excess of imports from the rest of the world over exports to the rest

of the world). A country that runs a trade deficit is buying more from abroad than it is selling abroad,

and is thus accumulating debt vis-à-vis the rest of the world. The ratio exported value to imported

value, called coverage ratio, gives similar information as the trade balance indicator. Hence values

greater than 100% means that exports values are superior to imports values or a positive trade balance.

447

Figure 8. Total emergy required in the Portuguese economy and monetary flows measured by

monetary aggregates M1, M2, M3 and nominal GDP.

Figure 9. Emergy to money ratios related to money flows measured as M2, M3, nominal GDP and

real GDP (chain-linked volume data, 2000 prices).

Considering emergy approach, the ratio emergy in imports to emergy in exports is the suitable

coverage ratio to also evaluate emergy trade balance. This emergy ratio is linked with countries

economic efficiency because each country develops an economy tuned to its own resources plus what

can be added through external trade. If emergy measure real wealth, than ratios greater than 100%

means that more real wealth is imported in flows of goods and services than the real wealth that leaves

the county in flows of exported goods and services. If a country is economic efficient than its GDP

would be higher, and it would enhance the product value added of its resources in successive steps,

from environmental, to processor, to manufacturer, to wholesaler, to retailer, to consumer. Each step

would involve additional inputs from the environmental and additional cost. If a country is economic

0.0E+00

4.0E+23

8.0E+23

1.2E+24

1.6E+24

2.0E+24

0.0E+00

5.0E+10

1.0E+11

1.5E+11

2.0E+11

2.5E+11

1999 2001 2003 2005 2007 2009

Em

po

wer

(se

J/y

r)

Do

lla

rs (

$)

M1 M2 M3

Nominal GDP Emergy

5.0E+12

7.0E+12

9.0E+12

1.1E+13

1.3E+13

1.5E+13

1999 2001 2003 2005 2007 2009

Em

erg

y t

o M

on

ey R

ati

o

(seJ

/$/y

r)

U/M2

U/M3

U/GDPr

U/GDPn

448

efficient it would export products with increased money value but with decreased energy value and

those products would have lower emergy contents. So, economic efficient countries should have ratios

of emergy in imports to emergy in exports superior to 100%. In this study the ratio of imported to

exported emergy flows (IMP/EXP) increased from 0.94 in 2000 to 0.97 in 2009 +2.7%). The

difference in imports-exports (IMP-EXP) is negative and 39.1% lower in 2009 than in 2000, which

mean that more emergy was exported than imported. On the other hand, the Emergy Yield Ratio

(EYR), was 2.47 in 2000 and dropped to 2.16 in 2009 (-12.4%), meaning that more imported emergy

flows were necessary per unit of total emergy required in 2009 than in 2000 (Figure 10). However, this

decrease in the EYR value is not only due to an increase in imports, but also to the decrease in the total

emergy required, as explained above. The Emergy Exchange Ratio (EER) decreased from 0.18 in 2000

to 0.16 in 2009 (-10.2%), both values being far below 1.0. This indicates that Portugal traded at a

disadvantage in the global market (Brown 2003, Brown et al. 2009).

Indices of National Environmental Support

The Emergy Investment Ratio (EIR), increased from 0.68 in 2000 to 0.86 in 2009 (+26.2%),

(Figure 10) which is due to the rise in imported emergy flows (+10.4%) and to the decrease in local

nonrenewable emergy flows (-13.2%). Thus, more external investment was necessary in 2009 to

exploit one unit of local resources than in 2000 (Gasparatos and Gadda 2009, Yang et al. 2010, Ulgiati

et al. 1994). The Percent Renewable Emergy (%Ren) index is almost constant, nearly 4.4% on average

in the three years covered by this study. This value is very low and indicates that, during the period

under analysis, Portugal’s development was based on natural nonrenewable resource extraction and on

imported resources, rather than based on renewable resource exploitation. It suggests that Portugal’s

long-term sustainability may be compromised and that the country may not be competitive in the long-

run (Brown 2003).

The Environmental Loading Ratio (ELR) increased slightly, from 22.0 in 2000 to 22.6 in 2009

(+2.5%) (Figure 10). This small variation is due to the fact that the increase in imports was almost

compensated by the decrease in nonrenewable flows. Even if the increasing stress on the environment

doesn’t show a significant increase, it is high when compared with the values for of other countries

(Brown 2003, Brown et al. 2009, Lomas et al. 2008, Siche and Ortega 2006). The high values are due

to the low fraction of renewable emergy flows within the total emergy required to support the

Portuguese economy.

Sustainability and Carrying Capacity

The Emergy Sustainability Index (EmSI), was 0.112 in 2000 and 0.096 in 2009 (-14.5%) (Figure

11). These values are far below 1.0, and are typical of consumer countries, suggesting that the

economy is not sustainable in the long run (Brown 2003, Brown et al. 2009).

Although the contribution of renewable emergy remains almost constant and the population have

increased, from 2000 to 2009, the renewable carrying capacity increased 1.8%, from 4.58E5

inhabitants in the year 2000 to 4.66E5 in 2009 (Figure 11). This is due to the fact that the renewable

carrying capacity is relative to the current living standard (that is, emergy required per capita for each

year) which is lower in 2009 than in 2000, as discussed above. Those values represent only 4.5%

(2000) and 4.4% (2009) of the population which could be supported by renewable sources alone, if the

living standards of the respective years were maintained.

449

Figure 10. Changes in national efficiency indices measured by Emergy Yield Ratio, Emergy

Investment Ratio and Emergy Loading Ratio.

Figure 11. Changes in the Emergy Sustainability Index and in the Renewable Carrying Capacity for

the years 2000, 2005 and 2009.

CONCLUSIONS

Total emergy required by the Portuguese economy decreased over the time period analyzed in this

study. From 2000 to 2009, there was a reduction of 3.3% in the total emergy accounted for. The

Portuguese economy also experienced slow economic growth, and its divergence from the average per

capita GDP of the European Union increased. Emergy from local nonrenewable flows was the major

contribution to total emergy (+49.3% in 2009), but its importance decreased in favor of emergy

imported flows, revealing that Portugal reinforced its dependence on the latter (+46.3% in 2009).

National emergy intensity indicators suggest that the Portuguese population had a lower standard

of living in 2009, as well as increased urban concentration. The ratio of total emergy required to real

0

5

10

15

20

25

30

1999 2001 2003 2005 2007 2009

Environmental loading ratio (ELR)

Emergy yield ratio (EYR)

Emergy investment ratio (EIR)

0.0E+00

5.0E+04

1.0E+05

1.5E+05

2.0E+05

2.5E+05

3.0E+05

3.5E+05

4.0E+05

4.5E+05

5.0E+05

0.00

0.04

0.08

0.12

0.16

0.20

1999 2001 2003 2005 2007 2009

Ren

ewa

ble

ca

rry

ing

ca

pa

city

Em

erg

y S

ust

ain

ab

ilit

y I

nd

ex,

Em

SI

EmSI

Renewable carrying capacity

450

GDP was adopted as the most appropriate to relate real wealth evaluated by the two amounts, although

differences in accounts persist and may be related to the work contributed by nature outside the

production function (Campbell 2009). Currently, the relationship between economic growth and the

importance of the environmental dimension (because growth precipitates the depletion of exhaustible

natural resources and induces a deterioration in the environment) is integrated in new growth theories

(Aghion and Howitt 2009) which argue that innovation and directed technical change make it possible

to reconcile the sustained growth objective.

The national emergy economic efficiency values show that Portugal had lower ability to exploit

emergy from imports in 2009, and that it traded at a disadvantage in the global market. In fact, during

the period, the Portuguese economy faced two economic recessions mainly related to low work

productivity and to a persistent deficit in the external balance of goods and services. It is important to

notice that the external balance of goods and services, either from the emergy perspective (IMP-EXP)

or the economics perspective (EXP-IMP), presents persistent deficits.

The general situation of the Portuguese economy, evaluated in terms of indices of environmental

support, sustainability and carrying capacity, although similar in 2000 and 2009, reveals a very low

system performance. Furthermore, the Portuguese government’s efforts to reinforce the use of

renewable energies, a significant reduce in emergy assigned to flows of imported fuel, capable of

shifting the economy to a growth path based on a larger weight of renewable resources, was not

achieved.

ACKNOWLEDGEMENTS

Research for this article was partially supported by FCT – Fundação para a Ciência e a

Tecnologia, Portugal, project reference PEst-OE/EME/UI4005/2011. The authors wish to thank the

awarded support by ISAER - International Society for the Advancement of Emergy Research.

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